EJN of FOCCISA’s  Input to the Walmart and Massmart Merger Process
Simon Vilakazi and Mandla Hadebe (Programmes Officers)
(Cape Town, Wednesday, 20 July 2011)

1. Introduction
The Economic Justice Network of the Fellowship of Christian Councils in Southern Africa (EJN of FOCCISA) works with 12 national councils of churches (NCCs) in the Southern Africa Development Community (SADC) region. We work on issues of trade, debt and finance, food security and SADC advocacy. We bring the voice of the Christian communities into issues of economy and we advocate for justice for disadvantaged members of society.  We have been following the developments in the recent Competition Tribunal-approved merger of the South African Massmart and the United States based Wal-mart enterprises. We would like to express our concerns regarding this merger of the two entities. Our concerns are in the following areas.
2. Goods procurement
Our work with communities in South Africa has attracted our attention to the plight of communities from areas where multi-national corporations conduct their business. Our concerns relate to the degradation of the environment as a result of these companies’ operations in areas occupied by or adjacent to communities without due regard for their well-being or dangers posed to their livelihoods by these actions. We therefore request the Competitions Tribunal to include as one of the conditions of the arrangement that the merged entities make necessary means to ensure that they conduct investigations of companies from which they procure goods and services. We urge the merged companies to engage the communities from which they source goods to know if the companies are not causing damage to the lives of people and the environment. We urge both companies to make it a condition of their merger that they do not buy goods and services from companies that are involved in the forced removal of communities from their land and sources of livelihood or in actions that cause the destruction thereof. 
3. Environmentally clean products
Related to our above request, our work has alerted us to the danger of products that are manufactured through processes that destroy the environment. We urge the merging companies to place high importance to checking if the products they buy for their businesses are not made from environmentally degrading ingredients. These products may range from raw minerals that are extracted from the earth without due care taken to replace them. We urge the companies to avoid sourcing products that lead to deforestation, pollution of water, air and the environment in general. In instances where this is not avoidable, we urge the merging companies to ensure that manufacturers of these products have measures to rehabilitate the environments that are degraded because of their manufacturing processes. 

4. Support to small and independent producers
Our work in communities and with independent producers uncovered the challenge that independent producers (small-scale farmers, informal traders, community producers, etc) face in their attempts to grow their businesses. Unfair competition from big enterprises makes it difficult for independent producers to grow their businesses. We therefore urge the merging companies to support independent producers by buying products and goods from them. If this means that independent producers’ businesses need to meet the health and quality standards of the merging companies for them to qualify as suppliers, we encourage the two companies to develop means of supporting small enterprises with resources and skills to improve the quality and health standards of their products. We advise the two companies to work in partnership with small and independent producers to find ways of addressing the challenges they face in their businesses. This will make it possible for independent producers to meet the standards that are set by the two entities in terms of production of goods. 

5. Sourcing of locally produced goods
As part of our work on trade, we have witnessed the destruction of local industries by cheap goods that are sourced from China and from highly subsidised European farmers. These goods do not assist in the generation of revenue of countries where they are sold. They destroy the economies of countries where they are sold due to an unfair advantage that they are sold at cheaper prices than locally produced goods. The influx of cheap clothing and garments from China and other Asian countries have eradicated local clothing producing firms and businesses in South Africa. 
We therefore urge both Wal-mart and Massmart to desist from a temptation of flooding their stores with cheap goods from China and highly subsidised farm products from the European Union countries.  We urge the companies to make all necessary means to source goods from local producers and factories.  They need to check the certificate of origin of goods that are assembled in South Africa since some of the goods are 90% manufactured outside of South Africa and only small aspects of their production is done in South Africa. We urge the merging entities to work with local associations of producers so at to be able to buy goods that are locally produced. 

6. Respect for human and workers’ rights 
South Africa is faced with a challenge of mass violation of human and workers’ rights by employers in factories and agriculture sectors. The working conditions to which the workers are subjected by their employers violate their human rights. This includes employers that exploit workers from other countries outside of South Africa. There are employers that restrict their workers from accessing their rights by intimidating them with threats of dismissal from their jobs. We feel that this is a worst form of modern-day slavery and it should be stopped from happening in a modern-day South Africa. 
As the Christian-faith organisation we urge the merging companies to undertake an assessment of compliance with best-practices in terms of human and workers’ rights by owners of companies they deal with. This includes checking if companies enable their employees to exercise their constitutional right of membership to trade unions and of having their basic conditions of employment rights respected by their employers. We request both companies to work with organised labour movements to obtain information on employers that make it difficult for their workers to exercise their human and worker’s rights. We support the contributions of organised labour in this process. 

7. Conclusion
The content of this document explains about our concerns regarding the merger between the Wal-mart and Massmart enterprises. We believe that as much as both enterprises are privately-owned, they have a role to play in the realisation of economic and social rights of ordinary South Africans. We do not give a blank-cheque support to this merger. The merger must make a contribution to the improvement of the quality of lives for all South African people. It should not exacerbate the present problems that our people have been struggling with before the merger is formalised. It should rather be an opportunity for enforcing a culture of respect of people’s rights by the business community that will be involved in the business of both companies. We are advocating for this change from our understanding that the merger of both companies will create a big enterprise which will be a major player in the South African business and social spheres.